INCOME TAX ACT, 1961

--Reassessment--Change of opinion Assessment under section 143(3)--Assessee-company engaged in the work of civil construction, had filed its return of income accompanied by relevant documents such as Profit and Loss Account, balance sheet, audit report, etc., and claimed deduction under section 80-IA(4). Assessing officer completed the assessment under section 143(3). Notice under section 148 was issued to assessee for reopening of completed assessment under section 147. Assessee-company, however, contended that aspect of deduction under section 80-IA(4) was discussed and dealt with in the assessment and assessing officer had applied his mind to those material and then allowed deduction in the assessment order, therefore, it was neither demonstrated nor revealed that the assessing officer had any tangible material with him so as to validly exercise the powers of reopening. Held: Rightly so as once the assessing officer on the basis of material before him had applied his mind and granted deduction in the assessment order, it was not permissible for him to exercise powers under section 147 on the same material on the ground that certain aspects were not considered or that they were overlooked. A change of opinion was no ground for exercise of powers under section 147. More so, it was found from the reasons recorded was that the assessing officer wanted to reopen the assessment as according to him certain aspects remained to be verified. It could not be gainsaid that reopening of assessment for the purpose of 'verifying' or 'verification' will be necessarily an action based on a mere change of opinion. The connotation of word 'to be verified', 'verification' is to re-examine the existing material. Reassessment powers could not be exercised to merely review the earlier assessment on the special ground that something was omitted from consideration or particular conclusion was imprecisely or wrongly arrived at. Formation of such belief by the assessing officer has to satisfy the requisite parameters which are conditions precedent to examine the provision under section 147.

It is evident that the necessary facts and material relating to the claim for deduction by the assessee under section 80-IA(4) made in the return of income were considered by the assessing officer. He applied his mind to those materials and allowed deduction as per his assessment order. It could neither be demonstrated, nor it is revealed that the assessing officer had any tangible material with him so as to validly exercise the powers of reopening. Once the assessing officer on the basis of material before him had applied his mind and granted deduction in the assessment order, it was not permissible for him to exercise powers under section 147 on the same material on the ground that certain aspects were not considered or that they were overlooked. A change of opinion is no ground for exercise of powers under section 147. [Para 6.3] In other words, 'the reason to believe' and the 'opinion' to be formed by the assessing officer for the purpose of exercise of powers under section. 147 have to be guided by the tangible material available with him at the time of proceeding to reopen and to record reasons for reopening and that such material was not with him when he undertook the original assessment. [Para 7.2] If the reasons recorded in the present case are attentively read, it is mentioned, 'during course of assessment it is remained to be verified, whether the assessee was the owner of the infrastructure facility or not'. In the next also it was stated 'on verification of P&L a/c'. It was further stated 'during the assessment proceedings it is remained to be verified the expenses incurred'. Thus, what can be figured out from the reasons recorded was that the assessing officer wanted to reopen the assessment as according to him certain aspects remained to be verified. It can not be gainsaid that reopening of assessment for the purpose of 'verifying' or 'verification' would be necessarily an action based on a mere change of opinion. The connotation of word 'to be verified', 'verification' is to re-examine the existing material. Verification is always with reference to the details already considered once. When one wants to verify his decision, it means that one reviews the decision. Reassessment powers could not be exercised to merely review the earlier assessment on the special ground that something was omitted from consideration or particular conclusion was imprecisely or wrongly arrived at. Formation of such belief by the assessing officer has to satisfy the requisite parameters which were conditions precedent to examine the provision under section 147. The necessary conditions being satisfied. From the reasons recorded themselves, therefore, it was seen that the assessing officer proceeded to exercise the powers since he wanted to verify certain aspects of the assessment already completed. [Para 7.4] The impugned notice for reopening is held to be illegal on the ground that it is based on a mere change of opinion and therefore, amounted to erroneous and illegal exercise of power under section 147. [Para 8]